Governance news bites

Governance is often in the headlines and the past few weeks have been no exception. Recent news related to governance includes: 

Whakaari Management Limited health and safety appeal

Whakaari Management Limited (WML) is appealing its conviction under New Zealand’s Health and Safety at Work Act 2015 (HASWA), asserting that as a landlord rather than a direct operator, it should not bear responsibility for managing safety risks on White Island. The company’s counsel argues its role was limited to licensing tour operators, who held responsibility for on-site safety management. In contrast, WorkSafe’s counsel maintains Whakaari Management retained control over the site as a Person Conducting a Business or Undertaking (PCBU), making it accountable for ensuring visitor safety in a high-risk place. The case underscores significant questions about the extent of a PCBU’s health and safety responsibilities, particularly where operational activities are outsourced, which could impact how liability is assessed for property-owning entities in hazardous or high-risk environments. There are implications for boards in their oversight of a PCBU, but not for directors’ duties directly under HASWA.

Read more here and here.

Bridging the gap: Insights into executive compensation and ESG goals

A recent study on executive compensation for environmental and social performance highlights a fundamental governance choice boards face: structuring compensation to effectively drive ESG (Environmental, Social, Governance) outcomes. The research confirms that explicit, quantifiable targets, such as emission reductions, outperform less structured, less hard-edged goals. Yet for complex areas such as community engagement, less hard-edged, flexible approaches proved more effective, underscoring the need for boards to tailor incentive structures to each ESG dimension. 

As a result, boards are encouraged to evaluate how explicit or implicit contracts align with measurable outcomes, balancing rigorous accountability with flexibility. Ensuring compensation structures truly promote ESG commitments could drive sustainable value while reinforcing investor confidence.

Read more here.

Board stability v strategic change: Vista’s cautionary stand

For directors, the Vista-Potentia dispute underscores a growing challenge: balancing board stability with strategic shifts. Vista’s board warns Potentia Capital’s push for director replacements could destabilise its cloud transition – a critical move in the competitive tech sector. This standoff reflects a broader governance dilemma, where changes driven by shareholders might clash with continuity in strategy. Directors should consider how board transitions impact innovation timelines, especially during significant transformations.

Read more here.